Higher building material costs fuel housing inflation

30 January 2026

Newly released Australian Bureau of Statistics (ABS) data has revealed the cost of a newly built home is 2.3 per cent higher than a year ago.

Master Builders Australia (MBA) Chief Economist Shane Garrett’s fresh analysis of today’s Producer Price Index data shows that building materials rose 1.8 per cent in twelve months.

“House building costs had been decelerating for much of 2025, but those days are history. Recently, we have seen an escalation in the cost of home building materials while continued labour shortages magnify the damage.

“A new house is now 47 per cent more expensive than it was just before the pandemic.

“Costs have deteriorated across nearly every category of building product. Cement products are up by 5.2 per cent while ceramics have risen by another 2.6 per cent. Fortunately, steel product prices have fallen by 4.6 per cent over the same period. If it wasn’t for steel prices, the pace of building products inflation would be even worse,” said Mr Garrett.

Following Master Builders Australia CEO Denita Wawn comments to ABC National Radio earlier this morning that the industry is already under extreme pressure due to a significant worker shortage, these building materials price rises are likely to further stifle efforts to end the housing crisis.

“Australia must avoid policies that will unnecessarily increase the cost of vital products that assist builders deliver housing and associated infrastructure.

“We need to do everything we can to dampen building cost inflation. With costs rising so quickly, it is vital that building companies have as much choice as possible around the products, materials and techniques they can use to deliver new homes,” concluded Ms Wawn.

Media contact: Dylan Hafey, Media Advisor

0497 330 064 | dylan.hafey@masterbuilders.com.au